India imports more oil in 5 years of Modi govt; 10% import cut by 2022 remains a dream

India has further strengthened its position of being a net importer of oil during the five years of the Narendra Modi government, floundering on an ambitious plan that entailed reducing countrys import dependency of oil by 10 per cent by 2022.

As per government's estimates, the country's import dependency on oil has increased from 78.3 per cent of total consumption in 2014-15 to settling at a new high of 83.7 per cent in the 10-month period of FY19. The increase has also been consistent with dependence on imported oil increasing in all the five years of the government with the number being 80.6 per cent in FY16, 81.7 in FY17 and 82.9 in FY18.

Ironically, the country imported more oil to meet its domestic demand in the past five years even though Prime Minister Narendra Modi had set out a road map for reducing India's crude oil imports by 10 per cent by 2022 in March 2015.

"We cannot be living in a dream world. India has not been able to raise domestic production of oil and gas for the past decade. Some of its ageing blocks are now showing signs of fatigue while new discoveries and production is not coming online. If we aspire to move of the path of self-sufficiency, efforts to boost domestic production should go on a war footing," said a former head of country largest state-owned explorer ONGC, asking not to be named.

Though the Ministry of Petroleum and Natural Gas (MoPNG) has taken several policy measures to ramp up domestic production with reforms such as the Hydrocarbon Exploration Licensing Policy, or HELP, and taking a series of de-bottlenecking measures in NELP, or New Exploration Licensing Policy, and pre-NELP regimes, the results are yet to show on the ground.

What is frustrating is that country's oil production has stagnated around 35 million tonnes (MT) since 2007-08 onwards while domestic gas output has actually fallen for the past four years. Over the past 19 years, from 1998-99 to 2017-18, India's crude oil production increased only by 8.8 per cent from 32.8 MT to 35.77 MT.

The decline has come at a time when consumption is rising, pushing the country to rely more on imports.

Higher imports have also meant rising import bill, pushing up the current account deficit. As per estimates, crude import bill in FY19 is expected to shoot up by close to 50 per cent to $ 130 billion, twice the level what government agencies were earlier projecting.

If the oil import bill reaches closer to $ 130 billion mark, it would be close to levels experienced in FY13 and FY14 when international oil prices had skyrocketed and hovered over $100 a barrel for most of the year. The Indian basket of crude at present is just about $ 65 a barrel.

This will make oil import bill for FY 19 the highest in the five years of the Modi government and very close to high import bill during UPA-II when the crude oil prices had breached all records to touch close to $ 140 a barrel mark.

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